CJ Group to emphasize M&AsCJ Group will focus on mergers and acquisitions as part of plans for global expansion this year, following a prolonged leadership vacuum that has halted major investment in recent years.
The move came as CJ Chairman Lee Jay-hyun, convicted of financial crimes, was sentenced to two and a half years in prison in a retrial last month.
“It is true that CJ has been cautious in its investments in recent years,” a source at CJ Group told the Korea JoongAng Daily on Wednesday on the condition of anonymity since the matter is still not official. “But there is growing consensus in the company that we need to consider mergers and acquisitions to further foster business expansion abroad and achieve our sales target.”
The sales target refers to CJ’s initiative dubbed “Great CJ” that sets a sales target of 100 trillion won ($85 billion) by 2020. The group hopes that 70 percent of sales come from global business.
The need was echoed in the New Year’s message delivered by CJ’s interim chairman, Sohn Kyung-shik.
“CJ will face headwinds due to the prolonged absence of Chairman Lee and tough market conditions at home and abroad,” he said. “But we should be focused on generating meaningful achievements in the global market to sustain growth.”
But the source denied multiple local reports released on Wednesday that said the group has already embarked on specific measures by hiring additional financial experts for its mergers and acquisitions division.
Other reports predicted that CJ will use the proceeds from selling CJ Hellovision to SK Telecom to fund future consolidations.
“The reports are based on the forecast by the media, not our plan,” the source said.
After Lee stepped down in 2013, CJ’s investments plunged sharply.
It planned to invest 2.4 trillion won in 2014, but 500 billion won of that was put on hold. The group had invested 2.9 trillion won in 2012 and 2.6 trillion won in 2013.
Entering 2015, the group refrained from laying out investment and employment plans because of Lee’s absence.
Key affiliates like CJ Korea Express have been on the lookout for buyouts in regions like Singapore, China and Southeast Asia, but the attempt fell apart and failed to receive enough momentum.
Food maker CJ CheilJedang is also looking for an acquisition opportunity to strengthen its bio products business division.
To help move the deal forward, the group hoped the ailing chairman would be granted clemency. It expressed disappointment with the Seoul High Court’s decision last month to sentence Lee to a prison term and 25.2 billion won fine for tax evasion and embezzlement.
BY PARK EUN-JEE [firstname.lastname@example.org]